BRUSSELS, May 3 (Reuters) - Britain’s George Osborne accused fellow EU finance ministers of trying to water down Europe’s bank capital rules and said this would make him “look like an idiot”, as talks about a law to stop another financial crisis unravelled in Brussels.

In remarks at the negotiating table, Osborne, who says he wants much tougher controls to avoid a repeat of the current crisis, fumed that regulation being discussed could dent the credibility of Europe and harm London, its top financial centre.

“I am not prepared to go out there and say something that is going to make me look like an idiot five minutes later,” Osborne said, referring to potential loopholes allowing some banks to sidestep new capital standards agreed by global regulators.

His remarks were relayed on television to watching journalists.

Even after 15 hours of talks, European Union ministers were unable to agree in the early hours of Thursday, although Denmark’s Economy Minister Margrethe Vestager said she hoped there would be a deal at the next meeting in Brussels on May 15.

Five months after British Prime Minister David Cameron angered EU partners by vetoing an EU fiscal treaty, a visibly agitated Osborne told the ministers’ meeting: “I am not asking for some UK carve out ... I will not be painted as somehow anti-European, demanding something especially for London.”

Michel Barnier, the EU commissioner in charge of financial regulation, accused Osborne of seeking an opt-out with a proposal that would let Britain impose higher capital ratios on its banks than elsewhere in Europe - something France and others fear could disadvantage continental institutions.

“London is a very important centre but... there are other centres alongside London which also merit consideration,” said Barnier, a former French government minister.

Osborne, however, was adamant. ”People will listen to what I say ... I represent the largest financial centre in Europe.

“You’ve got to allow me to sit down and go through the issues. You have not done that,” he said, adding he had resorted to checking news on his mobile phone as he waited to be involved in discussions that had by that time gone on for 10 hours.

He accused other ministers of trying to water down the EU’s version of rules laid down by global regulators on the Basel committee which are designed to guard against future financial crises, and said he could not support them.

At the heart of the dispute is the freedom states have to enforce stricter capital rules than those agreed for the European Union.

Britain and Sweden, which have two of the largest banking sectors in Europe relative to their economies, want the freedom to take extra steps to make banks safer.

German Finance Minister Wolfgang Schaeuble made light of the row as he left the meeting, saying the May 19 UEFA Champions League soccer final between Germany’s Bayern Munich and Britain’s Chelsea would be a chance to get even with Osborne.

“We will see Chelsea in Munich,” Schaeuble told reporters, saying he hoped to “get a bit of revenge for it having taken so long today”.

STRUGGLE

Ministers face pressure to break the deadlock, which comes as many of Europe’s 8,300 banks struggle with billions of euros of unpaid loans ahead of a self-imposed June deadline to finalise new capital rules.

London remained reluctant to compromise despite earlier calls from Spain, whose banks have suffered huge losses inflicted by a property crash, that rules were vital.

“At this time of financial crisis, we need to clear up all doubts about the quality of European banks,” Spain’s Economy Minister Luis de Guindos said.

Standard & Poor’s cut the credit rating this week of 11 banks in Spain, which has sunk into its second recession in just over two years.

Denmark, holder of the six-month EU rotating presidency, has been seeking to translate the higher capital standards set by the Basel Committee regulators into EU law and make this a reality by the start of next year by reaching a consensus and an accord with the European Parliament by the end of June.

It redoubled its efforts to reach a deal by calling Wednesday’s exceptional meeting, but the bid crumbled in the face of resistance to its pan-European formula.

NEGATIVE MESSAGE?

As much as the technicalities of bank balance sheets, the dispute is the result of a struggle for influence and power in a bloc shaken by the worst financial crisis in a generation.

Britain has been fighting to maintain its authority over the City of London, Europe’s financial capital, as other EU members move to centralise supervision of banking and finance.

Europe’s capital regime, when decided, will be closely studied in the United States and may influence how policymakers there interpret the Basel standards, while investors are eager to see the EU repair its vulnerable banking sector.

“Not having a European banking union ... on common capital requirements ... makes it very difficult for the euro project to work,” said Eric Stein, a portfolio manager at Eaton Vance in Boston that invests in European assets.

“If nothing happens, it will be a continued area for stress in Europe and send a very negative sign.”

Britain and Sweden argue that they need to protect the interests of taxpayers who could be called on to bail banks out if they face collapse. France wants capital standards to be more uniform across the EU.

One compromise ministers have discussed is to allow a margin of flexibility so countries that want to can require their banks to increase their capital buffers up to a certain limit, perhaps as much as 10 or 12 percent of risky assets for up to two years. This compares with Basel’s minimum of 7 percent.